Lithuanian businesses will not collapse due sanctions for Russia, says economist

Žinių radijas

Monday, August 4, 2014

Gitanas Nausėda, advisor to the president of SEB Bank, claims that a slowdown in the Russian economy, triggered by various EU and US sanctions, will affect Lithuanian exports which are retail-oriented.

“Indirectly, through a weakening of the Russian economy, our exporters will feel certain consequences. Lithuanian exports are oriented more toward the retail sales market. These are food products, textile, other widely used wares that are oriented toward retail sales in Russia, but retail sales are slowly weakening there,” Nausėda said in the Žinių Radijas programme Aktualioji Valanda last week.

According to him, these tendencies will remain in the Russian retail market for the near future. Nausėda also stated that, under current conditions, there is no insignificant likelihood Russia might strike back with its own import restrictions, quoting veterinary or other sanitary.

The economist did note that most Lithuanian businesses would do just fine even if the Russian market closed completely to them. “Many Lithuanian businesses would certainly know what to do if the Russian market suddenly closed overnight. They have backup plans set up and would certainly not perish. Obviously there would be economic outcomes to this, reduced economic indicators and layoffs, but businesses would not be ruined.”

Nausėda highlighted that Lithuanian exports have been changing lately – we’ve been trading more and more with the West and less with Russia.

Sanctions to Russia, according to him, will bring greater losses to our country than the rest of the EU. According to estimates, the Russian GDP could contract by 1.5 percent over this year due to sanctions. Next year this could rise to 5 percent, signalling a recession for the Russian economy. Meanwhile, for the EU, such sanctions would likely only cost 0.3 to 0.4 percent of its GDP.